Which of the following is not necessarily true in the long for a competitive industry?
A) Firms earn zero profits.
B) Firms set MC = MR.
C) A firm will not produce if the market price is less than their break-even price.
D) The long-run supply curve is more elastic than the short-run supply curve.

Question

Quizplus · Accepted Answer

In the long run for a competitive industry, it's not necessarily true that firms earn zero profits. While economic theory suggests that in perfectly competitive markets, firms will earn zero economic profits in the long run due to free entry and exit, this is an idealized condition. In reality, firms can earn positive or negative profits in the short run, and the long-run adjustment may not always lead to zero economic profits due to factors like innovation, product differentiation, and barriers to entry.

Which of the Following Is Not Necessarily True in the Long